El Salvador becomes the first country to adopt bitcoin as legal tender Tuesday. All enthusiastic supporters and detractors as well will be watching if a large number of people are willing to transact with bitcoins. President Nayib Bukele has been tweeting about first buying bitcoins and then purchasing them.
El Salvador had earlier bought 400 bitcoins ahead of the roll-out, with a market value of about $20 million at current prices. The country plans to buy "a lot more" of them, President Nayib Bukele said via Twitter, after buying the first batch of 200, he said, according to Bloomberg.
President Nayib Bukele's government claims the move will give many Salvadorans access to bank services for the first time and save some $400 million in fees on remittances sent home from abroad every year.
He started the ball rolling Monday evening by announcing El Salvador had bought its first 400 bitcoins, in two tranches of 200, and promised more were coming, AFP said.
Salvadoran skeptical about using bitcoin
Polls show Salvadorans are skeptical about using bitcoin, wary of the volatility of the cryptocurrency that critics say could increase regulatory and financial risks for financial institutions, Reuters said.
"This bitcoin is a currency that does not exist, a currency that will not benefit the poor but the rich," said skeptic Jose Santos Melara, who took part in a protest by several hundred people in the capital San Salvador last week.
"How will a poor person invest (in bitcoin) if they barely have enough to eat?"
In June, El Salvador's parliament approved a law to allow the crypto money to be accepted as tender for all goods and services in the small Central American nation, along with the US dollar.
The bill, an initiative of Bukele, was approved within 24 hours of being presented to Congress -- where the president's allies have held a majority since March.
Experts and regulators have highlighted concerns about the cryptocurrency's notorious volatility and the lack of any protections for its users.
The government is installing more than 200 bitcoin teller machines, some guarded by soldiers to prevent possible arson by opponents.
And Bukele has promised $30 for each citizen who adopts the currency.
"These are decisions the administration and lawmakers have taken without consulting" the population, said Laura Andrade, director of the Public Opinion Institute of the Central American University, which found in a poll that 70 percent of Salvadorans opposed the move.
Bitcoin is a digital currency that allows people to buy goods and services and exchange money without involving banks, credit card issuers or other third parties.
It was introduced in 2008 by an unidentified group of programmers as a cryptocurrency as well as an electronic payment system. It is reportedly the first decentralised digital currency where peer-to-peer transactions take place without any intermediary.
(With inputs from AFP)
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